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More defendants plead guilty in massive, $200M credit card fraud

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Federal authorities have charged at least 22 men and women living in New Jersey, New York and Pennsylvania in an elaborate credit card fraud scheme that officials say stole at least $200 million. Six defendants have pleaded guilty thus far, authorities say.
(AFP/Getty Images)

NEWARK — A New York man today admitted his role in an elaborate, nine-year credit card fraud that caused more than $200 million in losses and is said to be one of the largest credit card fraud schemes ever prosecuted by the U.S. Justice Department, according to authorities.

The bust-up of the sophisticated scheme, in which at least 22 men and women — many having ethnic ties to Pakistan – have been charged, was announced in February.

The defendants charged so far lived in New Jersey, New York and Pennsylvania, authorities have said. At the same time, federal prosecutors say that as the fraud continued on for years, the defendants allegedly wired millions of dollars to Pakistan, India, the United Arab Emirates, China and other countries.

Today’s plea in federal court in Newark, made by 39-year-old Muhammad Shafiq, of Bellrose, N.Y., marks the sixth guilty plea in the case. Three other defendants — Vernina Adams, 31, of Philadelphia, Raghbir Singh, 57, of Hicksville, N.Y., and Mohammad Khan, 49, of Staten Island — also pleaded guilty during the last two weeks, authorities said.

Two other defendants pleaded guilty earlier this year, including Tahir Lodhi, 53, of Hicksville, N.Y., who authorities say had a “leading role” in the scheme.

Over the course of an intricate case that began in 2003, the defendants conspired to defraud banks and credit lenders, according to court documents. Authorities say the scam involved 7,000 fake identities, 1,800 phony mailing addresses, fake companies, collusive merchants, 25,000 fraudulent credit cards, "pumping up" credit lines based on false information, then running up large loans that were not repaid.

Citing case documents and court statements, authorities say the fraud relied a three-step process: Defendants would make up an identity by creating bogus identification documents and a fraudulent credit profile with major credit bureaus. Then they would increase the credit of the fake identity by giving phony information about that identity’s credit worthiness to those credit bureaus. Then they’d run up big loans.

The scheme required Shafiq, Adams, Singh, Khan and other conspirators to build an elaborate network of false identities. Across the country, authorities said, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments and post office boxes, which they used as mailing addresses of the false identities.

The investigation is continuing, authorities have said, and more arrests are possible.

Prosecutors have not said in whose hands the money allegedly wired overseas landed. At least one area lawyer, Hervé Gouraige, a defense attorney and former federal prosecutor, has wondered aloud whether it ended up helping to fund criminal enterprises in other countries.

In a statement released in June, U.S. Attorney Paul Fishman said an analysis of the defendants' 169 bank accounts, sham companies and complicit businesses identified $60 million in proceeds that flowed through the accounts — much of it withdrawn in cash.